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Zuckerman Spaeder LLP Argues for Settlement on Behalf of Tribune Company Creditors

July 8, 2011

Zuckerman Spaeder LLP recently made its closing arguments to U.S. Bankruptcy Judge Kevin J. Carey, who is deciding whether to approve a plan of reorganization in the Tribune Company bankruptcy that would settle claims against the lenders that financed Tribune’s 2007 leveraged buyout (LBO).

On behalf of the official creditors committee, Zuckerman Spaeder partner James Sottile argued that Tribune creditors are unlikely to receive higher returns by litigating claims against the LBO lenders. He told Judge Casey that the settlement has been carefully evaluated by the court-appointed examiner, is fair and should be approved.

“The bottom line is, the examiner looked at all the evidence,” Mr. Sottile said. “The evidence shows that the settlement is a fair compromise of complex, hotly disputed issues. This is a case that you ought to settle.”

In 2009, Zuckerman Spaeder was retained as special counsel to the Official Committee of Unsecured Creditors in the bankruptcy of the Tribune Company. The firm investigated, evaluated, and litigated claims relating to more than $11.5 billion in loans that Tribune used to finance the LBO.

Following Tribune’s bankruptcy filing, Zuckerman Spaeder investigated whether the LBO loans were fraudulent. The firm reviewed millions of pages of documents, deposed LBO lenders, firms that examined Tribune’s solvency, and the debtor; worked with financial advisors to evaluate the case for Tribune’s insolvency; and conducted an extensive legal analysis. Zuckerman Spaeder then pursued two complaints against the company, which were stayed by the court as the company pursued a reorganization plan. Zuckerman Spaeder helped to negotiate the settlement argued for this week, which is included as part of a reorganization plan that is supported by the committee, the debtors, and the LBO lenders.

Zuckerman Spaeder was lead trial counsel for the committee in the three-week confirmation trial that concluded on April 12. Mr. Sottile presented closing arguments for the committee on June 27. In addition to Mr. Sottile, Zuckerman Spaeder’s team includes firm chairman Graeme W. Bush and partner Andrew N. Goldfarb, all of the firm’s Washington, DC office.